Pinterest Raises Another $225 Million, Valued at $3.8 Billion

For a company with almost no revenue, Pinterest Inc. sure is valuable.

The popular site for “pinning” collections of online images said Wednesday it raised $225 million from Fidelity Investments and other investors in a round of financing valuing it at $3.8 billion. The latest round brought Pinterest’s total fundraising to $564 million since it was launched in 2010.

It’s the company’s second fundraising round in eight months. In February, Pinterest raised $200 million at a valuation of $2.5 billion. The latest investment gives Pinterest a 52% greater valuation. The company said it had not yet spent any of the money raised in February.

The funding puts pressure on CEO Ben Silbermann to make money from advertisers who want to reach the site’s 25 million users, according to market researcher ComScore. Users visit Pinterest to post images of favorite outfits, food recipes and vacation destinations and share them with friends. Pinterest executives resisted ads until this month, when they began to experiment with letting marketers put “promoted pins” on the site.

Silbermann said he’ll use the extra cash to fund expansion overseas, where usage has more than doubled since the beginning of the year, as well as acquisitions. Pinterest will also ramp up investment in its mobile apps, which now account for three-fourths of visits.

“We hope to be a service that everyone uses to inspire their future, whether that’s dinner tomorrow night, a vacation next summer, or a dream house someday,” Silbermann said in an emailed statement. “This new investment enables us to pursue that goal even more aggressively,”

Asked why a $3.8 billion valuation is justified for a company that doesn’t yet generate meaningful revenue, Pinterest investor Rick Heitzmann described the site as a place where people discover what they love, and want to buy many of the things they discover. “People plan their weddings on Pinterest,” explained Heitzman, the managing director of FirstMark Capital.

Heitzman said he compares Pinterest to Facebook and Google by looking at the time users spend on the sites relative to the their intent to purchase products while there. Facebook users spend tremendous time on its site, he said, but aren’t there to buy anything. Google users are often searching for items to buy, but don’t spend as much time on its site. Pinterest users spend lots of time and are more likely to make purchases, he said.

In the latest round, Fidelity was joined by previous Pinterest backers, including FirstMark, Andreessen Horowitz, Bessemer Venture Partners and Valiant Capital Partners.